Report of the Committee Assigned to Draft the Council’s Resolution on Insurance

Pursuant to the decision adopted by the Council in its Wednesday session of 14 Shaʿban 1398 AH, which commissioned Their Eminences Shaykh ʿAbd al-ʿAziz ibn Baz, Shaykh Muhammad Mahmud al-Sawwaf, and Shaykh Muhammad ibn ʿAbd Allah al-Sabil to formulate the Council’s resolution on insurance in all its varieties, the aforementioned committee convened and, after deliberation, resolved as follows:

All praise is due to Allah. May blessings and peace be upon the Messenger of Allah, his family, his Companions, and all who follow his guidance.

To proceed:

The Islamic Fiqh Council, in its first session held on 10 Shaʿban 1398 AH in Makkah al-Mukarramah at the headquarters of the Muslim World League, examined the subject of insurance in its various forms. The Council reviewed much of what scholars have written on the matter and considered as well the decision of the Council of Senior Scholars in the Kingdom of Saudi Arabia, issued at its tenth session in Riyadh on 4/4/1397 AH under Resolution 55, which declared every type of commercial insurance unlawful.

After thorough study and discussion, the Islamic Fiqh Council resolved—by unanimous vote except for His Eminence Shaykh Mustafa al-Zarqa—to prohibit commercial insurance in all its forms, whether on life, commercial goods, or any other property, for the following reasons:

First: A commercial insurance contract is an aleatory commutative financial contract that involves gross gharar (excessive uncertainty). At the time of contracting, the policyholder cannot know how much he will ultimately pay or receive: he may pay one or two premiums and then a calamity occurs, entitling him to the full amount undertaken by the insurer; or no calamity may occur at all, in which case he pays all the premiums and receives nothing. Likewise, the insurer cannot determine, with respect to any given contract, what he will ultimately pay or receive.